Intel Cancels Fab 42

NEW YORK — Intel is delaying opening its 14-nm Fab 42 in Chandler, Arizona, as demand for PC microprocessors continues to decline.

As reported by Reuters, the facility was initially intended to produce Intel’s most advanced processors beginning at the end of last year. Instead, the plant will remain closed indefinitely and other plants at the same site are to be upgraded.

The move is more market-driven than indicative of any issues with Intel’s processor technology or manufacturing, said Charles King, president and principal analyst at Pund-IT told EE Times. “The company said it will be retrofitting three other plants with new technology rather than opening a fourth,” he said. “They are probably seeing a lower demand in some of their product areas than they have anticipated when they planned the facility."

Considering the pressure that traditional PCs and laptop markets have been under along with Intel move into smartphones, the decision makes sense, said King. Intel could not possibly go ahead with a facility that produces processors for which there is no demand. “If the orders aren’t coming in it would be ludicrous for Intel to increase manufacturing,” King said.

"It is a significant move because it’s a fairly large facility." Rob Lineback, senior market research analyst at IC Insights, told EE Times. "It is a push-out or push-back of using that facility. Keep in mind that facility was earmarked for the next generation wafer size transition from 300 to 450. That move is delayed by the industry, even though Intel and others are trying to make it more feasible.”

Lineback continued, “They decided they don’t need the extra capacity for microprocessors. We’re all kind of in agreement that it was the worst year for PC shipments since the 80s as far as percentage decline."

Everyone in the industry is waiting to see what their capital expenditures will be for 2014, which will be discussed today, whether they keep the level at above ten billion dollars or not. Only Samsung is investing more money in wafer fabs than Intel. Intel has been the largest capital works spender in the industry since the 90s, until Samsung passed them in recent years, pushing hard on several fronts. Whether this is a real pull back, a real slow down for Intel, we’ll find out more this afternoon.

I am yet to see the real competitive advantage between 22nm and 16nm. All this quest to get down to the next lower feature size does not add much value. Transistor is free in the digital domain. The extra space saving is good but customers are not buying that. They are looking at great power performance which nanometer CMOS technology hampers by higher dyanamic and static power losses.

This makes much more sense. About 80% of 22nm equipment can be used for 14nm. To upgrade their 22nm facilities to 14nm appears to be a much better economical choice than upgrading their facilities which still run at 65nm or 45nm.

"The question is whether this is a 'shrink to grow' situation where they move to a new model or if it is just cutting costs to try to wring out a few more years on the old path."

I think they should go the IBM way i.e. become a service company with high end fab capability (and spin out the bulk of their fabs as a foundry business). I think that's what's gonna happen in the end....

Wow Samsung seems to be everywhere in the race whether its smartphone or Fab. I guess their marketing strategy and the fact that they belong to other region makes lot of difference. But yes demand for PCs is decreasing and no one can deny that.